Best personal loan emi calculator in 2022

The personal loan EMI calculator is a very helpful online tool. It tells you exactly how much of a loan’s principal and how much interest you must pay each month. 

A customer only needs to enter the amount of the loan and the interest rate. The tool will figure out how much the EMI will be.

What Does EMI Stand For?

The full form of EMI is Equated Monthly Installment. It is the due monthly sum to the bank or a financial institution until the loan is paid off. It includes the interest on the loan and a part of the principal that needs to be paid back. The loan’s principal and interest amount is divided by the loan’s term or the number of months. 

This sum must be paid every month. EMI interest is higher in the first few months and decreases with each payment. The interest rate determines how much of each payment goes toward the principal. Even though your EMI payment is constant, the principal and interest will alter. 

With each payment, you will pay more toward the loan’s principal and less toward the interest.

Here’s how to figure out the EMI:

E = P.r.[(1+r)n /{(1+r)n – 1}]

where,

• E stands for EMI.
• P is the amount of the principal loan.
• r is the rate of interest that is calculated every month (r = Rate of Annual Interest/12/100. If the rate of interest is 10.5% per year, then r = 10.5/12/100 = 0.00875).
• n is the number of months the loan will last.

• Example:

If you borrow 10,00,000 from a bank at an interest rate of 10.5% per year for 10 years (120 months), 

then EMI = 10,00,000 0.00875 (1 + 0.00875)120 / ((1 + 0.00875)120 – 1) = 13,493. 

You will have to pay 13,493 monthly for 120 months to repay the loan. The total amount to be paid is 13,493 times 120, which is 16,19,220. Of this, 6,19,220 is interest on the loan.

Using the above EMI method by hand or in MS Excel takes time. It is difficult and can lead to mistakes. Online EMI calculator automatically does this math for you. It gives you the answer in a split second. It shows a visual chart showing the payment schedule. How the total payment is split up is also there.

How Does an EMI Calculator Work?

The online EMI calculator is simple to use, easy to understand, and quick. It has colourful charts and gives results right away. This calculator can be used to figure out the EMI for a home loan, a car loan, a personal loan, an education loan, or any other fully amortised loan.

The EMI calculator needs the following information:

• The principal amount of the loan you want to take (rupees).
• Loan term (months or years).
• Interest rate (percentage).
• EMI behind or EMI ahead of schedule (for car loans only).

You can change the values on the EMI calculator form by moving the slider. You can type them directly into the boxes if you need to put in more specific numbers. If you move the slider or hit “tab” after entering data, the EMI calculator will figure out your monthly payment again.

The calculator’s pie chart displays how principal and interest are distributed. It displays how much of the payment went to interest and principal. A table and chart will show how much is paid each month or year over the loan’s duration. Part of each payment goes toward the interest, and the rest pays the principal. 

During the first part of the loan, a big chunk of each payment goes to interest. As time passes, larger payments pay off more of the loan’s principal. The payment schedule shows how much of each year’s unpaid balance will roll over.

Calculating an EMI with a Floating Rate

Compare an optimistic (deflationary) and a pessimistic (inflationary) scenario to figure out the EMI for a loan with a floating or variable rate. The loan amount and loan tenure, which are needed to figure out the EMI are both up to you. This means you will decide how much of a loan you need and how long it should last. 

Banks and HFCs decide the interest rate based on the rates and rules set by the RBI. As a borrower, you should look at two worst-case scenarios for interest rates and figure out your EMI for each. This helps you determine how much you can afford each month, how long your loan will last, and how much to borrow.

• Positive (deflationary) Scenario

Let’s say the interest rate goes down by 1% to 3% from now. Think about this and figure out your EMI. In this case, your EMI will go down, or you can choose to cut the length of the loan. 

• Pessimistic (inflationary) Scenario

In the same way, let’s say the interest rate goes up by 1% to 3%. This is a pessimistic (inflationary) scenario. Can you keep making the EMI payments without much trouble? Even a 2% interest rate hike can increase your monthly payment during the loan’s term.

Conclusion

This calculation helps you plan for things that might happen in the future. When you take out a loan, you agree to pay back the money over the next few months, years, or decades. So think about the best and worst things that could happen, and be ready for both. In short, expect the worst but hope for the best! 

Piramal Finance is a great financing option for everyone. Visit their website to learn more about the products and services they offer.